Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.

No One Here Gets Out Alive

All is not well in the home of Gretchen and Peter Mansfield. Gretchen, 41 is a sales manager for Durham, N.C.-based pharmaceutical manufacturer BioRealm. Her husband Peter, 44, lost his sales job in mid-2015 and insecurity has been eating away at him.

A big part of Gretchen’s job is working with BioRealm’s SVP for sales, Brian Hatch, 35. Fit, good looking and very well compensated, Brian is Peter’s current nightmare.

Brian and Gretchen spend a lot of time traveling together, sometimes staying in the same hotel for days at a time. Peter, always the jealous sort, stole Gretchen’s work email password long ago and has been following her every move.

He’s read emails between Gretchen and Brian that left no doubt in Peter’s mind they were having an affair.

The last straw was when he picked up a voicemail from Brian that went direct to Gretchen’s email. Hearing Brian describe what he’d like to do with Gretchen the next time he saw her sent Peter over the edge.

At 11:10 am on September 15, 2015, Peter parked his family’s SUV in the parking lot of the Durham location of BioRealm.

From the open windows of the car, Metallica’s “For Whom the Bell Tolls” was blaring.

Peter wore a two-day beard, but there was nothing else in his appearance to warrant alarm.

Partner

As he walked to the front door, carrying a large black gym bag and a vinyl grocery bag, he caught the eye of Sandy Brick, Gretchen’s friend and coworker, whom he’d known for years.

Sandy always liked Peter.

“Hey Sandy,” said Peter with a smile.

He was in sales for years. He can do this.

“Hey Peter, what brings you here?” said Sandy.

“Gretchen forgot her lunch bag and her gym bag,” said Peter affably, smiling and holding up the gym bag as he did so.

He did this just as Sandy reached the front door. Not giving her action a second thought, Sandy swiped her security card to open the front door and allowed Peter in ahead of her.

“You know where Gretchen’s office is, right?” Sandy said.

“Sure I do,” said Peter with a smile that faded a little too quickly.

But instead of heading toward Gretchen’s office, Peter made a beeline for Brian’s office, in the opposite direction.

Peter half-jogged to Brian’s office pulling a Glock 9 mm handgun with a 12-round magazine from the grocery bag and an AK-101 with a 30-round clip from the gym bag.

Approaching Brian’s office, he heard his voice, that same confident baritone that Peter last heard on Gretchen’s voicemail. Peter’s rage went from burning red to white hot.

Now running, Peter burst into Brian’s office and shot him three times in the head with the Glock. Peter bit completely through his lower lip as he shot Brian, so intense was his anger.

Not knowing exactly what they heard, BioRealm employees turned their heads to see Peter, with blood running from his mouth, leaving Brian’s office holding the handgun and the assault rifle and heading toward Gretchen’s office.

Now it’s clear what’s happening. Screams begin to rise from the cubicles.

“He’s going for Gretchen!” a woman shouted.

Two men rushed Peter and he shot them down with a burst from the AK-101.

Gretchen poked her head out of her office at the sound of the second round of shots. She saw Peter coming at her. But it wasn’t like it was him at all.

His face was a grey mask and his pupils were pinpoints.

Gretchen’s right hand went up reflexively as Peter fired a 9 mm bullet through her hand and into her temple. Peter fired again and again, some of the bullets hitting Gretchen’s falling body and some of them ricocheting off of office fixtures.

In a half-jog, wiping spasmodically at his bleeding mouth, Peter moved back to the front door.

People attempting to flee the building scattered as he approached. Peter fired with the AK-101 as he neared the front door, striking at least half a dozen people as those more fortunate fled in a different direction.

The exit door was streaked with blood. A woman with sandy hair was propped against the door, dead.

Peter grabbed her by the hair and tossed her aside to clear his exit. The door wouldn’t budge. So he shot the latch to pieces with the AK-101.

Peter walked out to the parking lot, placed the muzzle of the Glock in his mouth and pulled the trigger. Blood splattered on the BioRealm sign adjacent to the front door.

Peter Mansfield’s final visit to BioRealm lasted all of three minutes and 25 seconds.

Falling Short of Competence

BioRealm prided itself on having a state-of-the art emergency response and security system. In the wake of numerous office shootings throughout the country, the company installed swipe card security six months before Peter Mansfield’s shooting rampage.

Within 10 minutes of the attack, a text alert was sent to all BioRealm employees and their preferred emergency contacts informing them of the incident.

The text informed BioRealm employees to punch in a code number to let the system know they were safe and sound.

The text lacked specific detail, however, only informing employees and next of kin that an incident had occurred at the Durham campus and that BioRealm was working with local authorities to resolve any issues.

The texting system also failed to take into account any employees that might have gone into hiding when Peter Mansfield first opened fire.

Peter shot Brian Hatch down at 11:12 am.

At 1:10 pm, Angela Brighton, an event planner who assisted the BioRealm sales team, was still hunkered down in a utility closet on the first floor of the Durham offices. When the shooting started, Angela fled for cover, not having time to take her cell phone with her.

In her haste to pull the closet door shut, Angela lacerated her shin against the edge of a mop bucket. Traumatized and now dehydrated, Angela finally burst out of the closet at 1:15 p.m., overcome by claustrophobia and pain and crying hysterically. The building by then had been evacuated.

Angela suffered the surreal experience of walking through the BioRealm offices, seemingly by herself. In her shock, she saw a smear of blood on a corridor wall, and traced it with her finger, as if to confirm for herself that it was real.

The first person she encountered was a County Police Lieutenant, who looked at her in shock when he saw her.

“Ma’am, have you been in here the whole time?” the Police Lieutenant asked her.

“That’s five employees that aren’t in the time and attendance system as being on business travel or vacation and who haven’t responded to the emergency text.”

“Dead and injured, again?” Ryerson asked Galbreath.

“Seven dead, four injured, one critically.”

“Text the families of the missing again,” Ryerson told Blinton. “Let them know that we’re still working with authorities to find their relatives.”

“Text them?” Blinton asked.

“Yep. Do it. It’s the fastest way to get to them,” Ryerson said.

Blinton gave Galbreath a look and then turned away to start texting.

The swirl of events continued.

Social media was alive with cell-phone footage of Peter Mansfield’s exit from the BioRealm offices, when he heartlessly yanked a dead woman’s body from the door and shot his way out.

A gutsy BioRealm intern somehow managed to follow him to the door, shooting video with her phone. She posted the video to Facebook within ten minutes of Peter’s death.

BioRealm’s attempts to comfort bereaved families and provide information to others continued to fall short.

Four hours after the incident, no BioRealm employee had reached out to families in person to tell them what was going on. Contrasting this failure was the excellent effort put out by local emergency responders, who placed personal calls to the homes of every dead or injured employee.

With frustration against BioRealm building to a peak, the grieving sister of a slain employee became outraged when BioRealm couldn’t give her a solid answer as to when she’d be able to enter the building to collect his belongings.

“What do you mean you can’t answer that?” she screamed at a BioRealm employee outside the Durham offices as television cameras recorded the moment.

“My brother is dead! Answer me!” she screamed as the employee, rattled, turned his back on her and headed back into the building, all the while on camera.

Television news producers edit the blood-spattered BioRealm sign into their coverage.

It took BioRealm executives until noon the following day to determine that their time and attendance system malfunctioned and that the five “missing” employees were actually in the building at the time the shooting occurred and had fled to their homes.

None of the five ever came back to work for BioRealm.

No Quarter Asked or Given

Executives at BioRealm were prepared for an active shooter scenario, or so they thought. There was the aforementioned addition of swipe card security. The company was also banking on its text messaging system to get crucial information out to friends and family in a timely manner.

The company had created an evacuation plan and an emergency communications plan in case of an extreme weather event or some other catastrophe. The actual event, someone’s spouse entering the building and killing people, simply overwhelmed all preparations.

Keith Ryerson’s inability to realize the importance of speaking directly to employees and their families on the most notorious day in his company’s existence did not play well.

Coupled with the results of investigations that reported that BioRealm failed to adhere to its own crisis response policies, families that felt their loved ones were killed or injured due to corporate security laxity filed suit.

Also filing suit were 25 BioRealm employees who left the company after the shooting. They alleged that the company’s emergency management training and security measures were inadequate.

Included in that class of litigants were Angela Brighton and Gabe Brooks, the two employees who were left behind the day of the shooting.

“Let me get this straight. Nobody made any attempt other than a text message to reach you and no one came looking for you,” one of the attorneys handling the lawsuit asked Brighton and Brooks.

“No one,” Brighton said.

“No one, means no one,” said Brooks, whose usually sunny disposition was under a very dark cloud.

“Who allows a non-employee to enter a supposedly secure building carrying a heavy black bag?” another attorney representing the employees in the lawsuit said to one of his colleagues as they prepared their brief.

The reputational harm caused by social media sharing of the Peter Mansfield shooting video, plus the images of a BioRealm employee turning his back on a grieving family member also wouldn’t go away.

“We’re going to have to up investments in security,” Nathalie Galbreath told Keith Ryerson in a meeting two months after the shooting.

“I’m talking metal detectors on every door and armed security guards. I think it’s the only way we’re going to get any sense of stability in our workplace,” she added.

“Do you know what our legal bill is already from this?” Keith Ryerson said to her.

“Um, no, I don’t know what it is,” Nathalie said, not feeling very patient.

“How about $650,000 and we’re not even at trial with any one of five lawsuits?” Keith said.

“Go ahead and order the metal detectors, order the guards,” Keith said weakly.

Risk & Insurance® partnered with Black Swan Solutions to produce this scenario. Below are Black Swan Solutions’ recommendations on how to prevent the losses presented in the scenario. This perspective is not an editorial opinion of Risk & Insurance®.

1. Crisis Response and Business Continuity plans must coordinate with community police, fire and emergency medical agencies. In addition, pre-establish coordination with a local chapter of the Red Cross. All organizations rely on community responders to assist in a crisis. Yet most never proactively involve these same agencies in plan development and testing. If a crisis occurs, this can result in significant challenges related to cooperation and coordination.

2. Have a plan for testing, shelter in place and evacuation processes including a reliable means to account for every employee on premise at the time of the event. This information will also be invaluable for first responders involved in the search and rescue effort.

3. Have a secure centralized database for up to date information. This will allow for timely and accurate notifications to stakeholders.

4. Consider contracting with a specialized crisis call center to ensure you have a plan in place to accommodate mass inquires while providing a professional and compassionate response. Families will expect your organization to provide timely information and account for their loved ones who may have been affected by the crisis. The volume of inquiries and requests for information will often overwhelm your expectations and capabilities to respond.

5. Difficult news must be delivered personally. If the news is not good, make the effort to say it either in person or on the telephone – don’t text it. Realizing you have to use the tools and contact information you have, do your best to connect on a personal level, no matter how challenging, when you must deliver bad news.

6. Prior to a crisis, identify and train organizational personnel who will interface with victims and families in a critical event. Understand the importance of self-care for those involved in responding to the incident and debrief them at the end of every shift. Consider contracting with an organization to provide specialized training, as well as to provide guidance and support to those employees during the crisis.

7. Pre-consider strategies for establishing a family assistance center, typically at a hotel, where victim families can gather to obtain information and receive emotional support and psychological first aid. Families also have an opportunity to obtain information from responding authorities.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]

Ask the average citizen what they think about the future of U.S. manufacturing, and you’re likely to hear bleak projections of companies shipping their operations offshore, or robots displacing human workers. Overall, the industry’s public image is fading at the edges — people perceive waning relevance and opportunity.

“But if you ask manufacturers what they think, the response is the exact opposite. U.S. manufacturers are actually quite enthused about the future,” said Seth Hedrington, Senior Vice President and General manager, National Insurance, West Division, Liberty Mutual Insurance. “It’s a very dynamic industry with new opportunities every day.”

Advancements in technology are changing the game in terms of capabilities, efficiency and agility.

“Automation and robotics enable smaller entities to produce at a smaller scale, which puts pressure on every player to become more efficient,” Hedrington said. But additional, less publicized

technology is also making a big impact. The Internet of Things, blockchain, and 3D printing, to name a few, are lowering barriers to entry and enabling companies to move into new markets more quickly.

Seth Hedrington, Senior Vice President and General Manager, National Insurance, West Division, Liberty Mutual Insurance

Thanks to these developments, technology is driving competition. However, its benefits are simultaneously counteracted by the challenge of keeping up with rapidly-changing consumer preferences, government regulation, and an ongoing labor shortage.

The result is an environment teeming with both opportunity and obstacles. “Manufacturers have to make changes to stay in the game, but that introduces new risks,” Hedrington said.

Here are five ways manufacturers are reacting to a newly competitive environment that may expose them to unforeseen risks:

1. Stretching an existing workforce to combat a shortage of qualified workers.

The inability to attract and retain workers remains a top challenge for manufacturers, in part because the nature of the skill set required is changing rapidly. Because technology plays such a significant role in front-line production processes, manufacturers need people who not only operate the machines, but also understand how they work.

“They need workers who are more adept with technology, and that’s harder to come by,” Hedrington said.

To increase capacity, companies are lengthening or adding shifts for their existing workforce, which increases the likelihood of fatigue and the risk of injury. While co-bots may reduce labor demands and mitigate safety risk over the long term, they too present short-term challenges.

“Introducing new machinery or even new workers creates unfamiliarity, and that initially increases safety risk,” Hedrington said.

These changes also have product liability implications. “When you extend shifts, you’re taxing the equipment as well as your workers,” Hedrington said. “That makes it more difficult to achieve a consistent level of product quality.”

Thanks to recent tariffs on key imports like aluminum and steel, raw materials are becoming more expensive. “Manufacturers are faced with some of the most extreme fluctuations in the cost of materials that we’ve seen in recent history,” Hedrington said.

To control costs, some companies are turning to suppliers from regions not impacted by the tariffs. But significant risks always accompany a change in trade relationships. Product defect liability is chief among them, but the risk of supply chain interruption is also an issue.

“If you’re working with alternate suppliers and relationships are not as established, the risk of interruption is greater,” Hedrington said. Failure to deliver products on time ultimately presents a reputational risk and threatens a manufacturer’s ability to keep their contracts.

Risk Management Steps:

Maintain relationships with previous suppliers.

Develop contingency plans and a network of backup suppliers.

Review contract language addressing liability for faulty materials.

3. Diversifying operations to become more nimble and fast-paced.

Technology makes it easier to stay connected anywhere in the world, and more manufacturers are taking advantage of that to open multiple locations across the U.S. and abroad.

“As companies start to feel pressured by the competitive environment, they’ll look for opportunities to manufacture in other parts of the world where regulatory hurdles and costs are smaller,” Hedrington said.

That, however, may increase exposure to intellectual property (IP) theft. While cyber breach happens everywhere, an international supply chain typically means a more expansive network, so the potential for infiltration and IP theft is greater. The ability to seek damages for IP theft occurring outside the U.S. can also be more challenging.

“A global network is a lot more difficult to manage—you need to regularly evaluate who has access, what they have access to, and make sure the access is secure,” Hedrington said. Limiting access to confidential information to specific groups or a specific location, like a U.S. headquarters, could help mitigate the exposure.

Risk Management Steps:

Add language to contracts that protect proprietary and IP rights.

Limit research and development to company headquarters.

Review internal IT protections.

4. Making facilities “smarter” to improve production and output.

More manufacturers are incorporating sensors and internet-enabled technology that allows machines to collect and share data and work together in an automated fashion. This ‘smart’ technology provides valuable insights into the efficiency of production processes.

“The risk associated with “smart” machinery is their interconnectivity,” Hedrington said. “Anytime you have that level of connectivity, you have an increased level of risk to cyber breach.” It’s also easier to make unintentional or unauthorized changes to product design and specifications or material thresholds, which could impact product quality and safety.

“Many manufacturers don’t perceive themselves as major targets for cyber-attack, but failing to appreciate and mitigate that exposure can result in significant losses. In addition to reviewing your internal IT safeguards, it’s critical to review your insurance options. If you’re not considering the benefits of insurance, that’s a significant missed opportunity to protect your business,” he said.

Risk Management Steps:

Update your cyber policy to include both first- and third-party coverage.

Manufacturers in a variety of consumer product segments, from razors and eyeglasses to mattresses and sneakers, are increasingly exploring direct to consumer models that cut out the middle man. While few manufacturers are abandoning their traditional distribution outlets all together, they are considering e-commerce and even brick-and mortar locations of their own.

In addition to increased efficiencies, this format allows manufacturers more control over the customer experience and a bigger share of the profits.

“Going direct-to-consumer is another way to beat out competitors,” Hedrington said. “Technology and the connectivity of everything has helped open up new distribution avenues.”

It also, however, confers liabilities to the manufacturer that the middle-men normally accept, such as product and safety liability for proper packaging and labeling, as well as other operational risks that come with running a storefront, including workers’ compensation, cyber, property and general liability exposures.

Risk Management Steps:

Don’t completely shut down traditional distribution channels.

Ensure you have the skills to manage operational risks of direct distribution.

Build a cross-functional team to build a thorough risk management plan.

Your Insurer’s Experience and Expertise Matter

Manufacturing represents one of the largest business segments that Liberty Mutual serves, and teams across the organization have specialized expertise in the unique challenges facing this evolving sector.

Liberty insures a wide variety of manufacturers, wants to write more, and has the products to address the industry’s specific exposures. The company can offer a holistic solution that includes core property & casualty, as well as cyber, D&O, and environmental lines through Ironshore, a Liberty Mutual company.

“Liberty Mutual is entrenched in the risk management practices of the manufacturing industry. Our risk control professionals participate in many boards and committees that create standards to improve equipment, product, and employee safety. Additionally, our Industry Solutions and Product Management teams have a deep understanding of the manufacturing industry and help customers stay ahead of emerging risks,” Hedrington said.

In addition, Liberty’s claims handlers have the experience, capabilities, and knowledge to deliver quality outcomes so manufacturers can rebound from losses as quickly as possible.

“Our commitment to this space manifests itself in many ways, and that will hold true as U.S. manufacturing continues to evolve,” Hedrington said.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty Mutual Insurance. The editorial staff of Risk & Insurance had no role in its preparation.

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